Spending on rail seen stuck at the station

Major U.S. freight
railroads and their advocates have argued for years that government investment
is needed in the country's rail system to take freight off congested highways
and keep the economy moving, Reuters reports. But supporters say rail
investments have been largely ignored by Congress, suggesting political support
is lacking, despite warnings action must be taken sooner rather than later.

"We're in a growing
crisis in terms of investment," Republican Congressman Tom Petri of
Wisconsin, who is a member of the House Transportation and Infrastructure
Committee, said in an interview. "Any serious country needs to take a
long-term perspective and make reasoned investments in its future."

But many rail analysts are
skeptical government will act.

"After all of the
money that has been spent on bank bailouts and the stimulus package, I doubt
there will be enough political will to support significant investment in
railroads," said Jason Seidl, an analyst at brokerage Dahlman Rose.

Unlike highways that
receive public funding, private U.S. railroads foot the bill for rail
investments -- spending called insufficient to meet the country's future
transport needs by Petri and many industry executives at a meeting this week.

"There is not a long
tradition of funding freight infrastructure -- yet," said MarySue Barrett,
president of Chicago's Metropolitan Planning Council, at the event looking at
how to get rail freight investment included in the Surface Transportation
Reauthorization Bill.

Currently, the funding
blueprint making its way through Congress mainly for federal highway and
transit programs includes provisions to streamline freight movement, improve
infrastructure and boost safety. For instance, a Senate provision would
authorize a 10 percent shift in freight traffic from trucks to rail and other
modes by 2020.

U.S. freight railroads are
lobbying for greater, long-term government investment and have proposed tax
incentives to expand capacity and favor public-private partnerships for
infrastructure projects. Much of the concern comes from U.S. Department of
Transportation estimates that rail freight tonnage will rise 88 percent by
2035.

A 2007 study compiled for
the Association of American Railroads estimated the industry would require
investments of $148 billion for infrastructure expansion over that period to
keep pace with the forecast demand. About $96 billion of those funds could come
from private railroads, it said.

While demand is set to
grow, available track in the country is shrinking. Logistics professor Tom
Mentzer of the University of Tennessee said that, when he started watching
railroads in 1975 there were 225,000 miles of rail in the United States. Today,
that number is about 150,000 miles. But he was not optimistic about big
government spending any time soon.

"I don't see things
changing without a crisis," he said, citing taxpayer sentiment. "Rail
is just not a popular issue."

A study issued last week by
the Economic Intelligence Unit for consultant KPMG polled 118 U.S.
infrastructure executives and found more than 90 percent were concerned the
current level of rail infrastructure cannot support long term economic growth.
More than a quarter called for government involvement.

Kristine Burr, Assistant
Deputy Minister of Policy for Transport Canada, told reporters at the Chicago meeting
that the urgency of Canada's own transport situation had helped the government
take actions that included increased rail spending.

"We were facing a
crisis -- there was a lot of congestion," she said.

Executives hope the United
States will take a similar approach.

"The movement of goods
around the country is something people take for granted," said McCain
Foods VP of Planning, Distribution and Customer Service Ron Pillsbury. "We
need to educate constituencies around the country about what this means to them
and their daily lives," he added. "We need to help build political
support."